Follow Us:

Defence procurement

The initiative taken by the Ministry of Defence on procurement seems sound but India will take another two to three years to become self-reliant, for which constant efforts are required and the dependence on the bureaucracy must be reduced.

PK VASUDEVA | New Delhi |

Defence Minister Rajnath Singh released the draft Defence Procurement Procedure Policy 2020 in New Delhi on 20 March. This policy aims to make India a major global centre of defence manufacturing by involving the private sector in manufacturing activities under the ‘Make in India’ initiative.

The government has also introduced the provision of purchase of defence equipment in various categories at affordable rates under the lease process. The minister had said that under the new policy increasing the participation of Indian industries in defence production would expand this sector.

As per reports, arrangements have been made to provide domestic manufacturers raw materials, special types of minerals and software at affordable rates. It is a national policy to purchase defence equipment.

Under the Defense Procurement Policy (DPP), submarines can be launched through Project Strategic Partnership. At the same time, arms will start under the project strategic partnership of the factory. With the introduction of the new government policy, the process of buying sensitive weapons or machines will be speeded up and the purchase of necessary weapons or machines will be expedited. Under the DPP, indigenously designed, developed and manufactured (IDDM) equipment will be given first priority in the procurement of defence sector. Also, the manual associated with the defence procurement process will be updated every two months.

This committee was formed in August 2019. On that occasion, Mr. Rajnath Singh had said that the intention was to make India self-reliant in the matter of defence equipment. He said that we want to make India a stronghold of production of defence equipment.

With the experience gained by the Indian defence industry and the Ministry of Defence working together; the time has come for us to strengthen the Make in India initiative, he said.

The draft of defence procurement process should have a greater indigenous share in the weapons acquired by the Indian Army. The government of India recently introduced a new draft policy that sets a $25 billion defence production target, including making $5 billion from exports, by 2025.

The Defence Production and Export Promotion Policy (DPEPP) 2020 is meant to bolster local production of weapons and platforms by developing “a dynamic, robust and competitive” defence industry.

The draft policy also said the Ministry of Defence will set up a technology assessment cell to assess industry’s ability to design, develop, produce and re-engineer assembly lines to manufacture major systems such as armoured vehicles, submarines, fighter aircrafts, helicopters and radars.

“The DPEPP 2020 is envisaged as overarching guiding to provide a focused, structured and significant thrust to defense production capabilities of the country for self-reliance and exports,” the MoD said.

However, some defence experts and analysts are unimpressed with the draft policy.

Amit Cowshish, a former financial adviser for acquisition with the Defence ministry, said the DPEPP is high on rhetoric but low on specifics.

India’s current defence production turnover is about $11.42 billion. Of this, $9 billion comes from state-owned enterprises and ordnance factories, while the private sector accounts for $2.42 billion.

From the total amount, $1.53 billion comes from export business.

“It disregards financial reality, which is grimmer now due to the rampant pandemic than was the case in the past,” Cowshish said, referring to the spread of the coronavirus that has hit economies worldwide.

A more productive defence industry in India will depend on how much money the government can spare for local procurement as well as the availability of material in the domestic market ~ two factors that should be a matter of concern, particularly with export targets, according to Cowshish.

Currently, India spends about $18.52 billion annually on weapons and platform purchases, out of which 60 per cent is sourced from domestic companies, with remaining supplies coming from foreign vendors.

About $11 billion of those appropriated funds go toward India’s 50 state-owned laboratories focused on defence research and development, nine stateowned companies, and 41 ordnance factories.

Conversely, private defence companies, including 3,500 micro and small enterprises, get a little over $2 billion from this.

A CEO of a private defence company in India, speaking on condition of anonymity, said the draft policy fails to provide “a clear road map and direction for streamlining defence procurement and production.”

He argued that defence production would only improve if there were mutual trust, handholding, active participation and patience in the development process between the private and public sector. Senior executives at the state-owned enterprises Hindustan Aeronautics Limited (HAL) and Bharat Electronics Limited (BEL) would not comment on the draft policy, saying they are not authorised by the government to comment on MoD policy issues being a public sector unit.

However, Venkatesh Damal Kannan, a former research and development director with Hindustan Aeronautics, said achieving the $25 billion target would be possible if the current capital allocation of $18.52 billion for purchasing weapons and platforms is doubled.

There should also be a willingness from the Indian military to field a larger number of indigenous products, Kannan added, and improved bureaucratic processes in the MoD. However, Cowshish said the military’s arms requirements should not be held hostage by efforts for indigenisation. “In the meantime, especially in situations like the one we are faced with vis-à-vis China, there is no alternative to buying equipment, platforms, ammunition from abroad if what is needed is not available in India,” he said.

The initiative taken by the Ministry of Defence on the latest defence procurement policy seems sound but it will take another two to three years to become self reliant (Atamnirbhar) for which constant efforts are required and the dependence on the bureaucracy has got to be reduced.

The writer is a retired senior professor of international trade and member of the Vivekananda International Foundation